FDIC Board denies request for private hearing, finding that respondents did not demonstrate exceptional circumstances that would cause a public hearing to threaten the safety and soundness of the bank.

[.1]Practice and ProcedureHearingsPublic or PrivateStandards
Respondent requesting a private hearing must give concrete evidence that demonstrates how the facts of its case differ significantly from those involving other institutions as to warrant special treatment. Concern about negative publicity is speculative.In the Matter ofLARRY J. WHITEHEAD,DORIS D.PALMER,MARY H. RAY, andLOUIS W. FORTENBERRY,
individually, and as directors andinstitution-affiliated parties ofTHE BANK OF WALNUTWALNUT, MISSISSIPPI
(Insured State Nonmember Bank)DECISION AND ORDER ONREQUEST FOR PRIVATE HEARINGDocket No. FDIC-94-40k

DECISION AND ORDER ON REQUESTFOR PRIVATE HEARING

BACKGROUND

On May 16, 1994, the Federal Deposit Insurance Corporation ("FDIC") issued a Notice of Assessment of Civil Money Penalties, Findings of Fact and Conclusions of Law, Order to Pay, and Notice of Hearing ("Notice") pursuant to section 8(i)(2) of the Federal Deposit Insurance Act, 12 U.S.C. § 1818(i)(2). The Notice alleged that Larry J. Whitehead, Doris D. Palmer, Mary H. Ray, and Louis W. Fortenberry ("Respondents"),{{11-30-94 p.I-103}}individually, and as directors and institution-affiliated parties of The Bank of Walnut, Wal-nut, Mississippi ("Bank"), have engaged or were engaging in unsafe or unsound banking practices and/or violations of laws or regulations and requested assessment of civil money penalties.
On June 1, 1994, Respondents filed a Request for Private Hearing. On June 13, 1994, FDIC Enforcement Counsel filed FDIC's Response to Request for Private Hearing and Memorandum in Support thereof, opposing the request.

[all] hearings on the record with respect to any notice of charges issued by a Federal banking agency shall be open to the public, unless the agency, in its discretion, determines that holding an open hearing would be contrary to the public interest.

This section specifies that a "public interest" test shall be used in determining whether an exception should be made and a private hearing allowed. In In the Matter of The Citizens Bank of Clovis, Clovis, New Mexico, FDIC-91-406b, 2 P-H FDIC Enf. Dec. & Ord. ¶8012 (Mar. 2, 1992), the Board of Directors ("Board") of the FDIC set forth the standard for judging requests for private hearings. Because of the statutory presumption in favor of public hearings, the Board concluded that "private hearings are to be granted under exceptional circumstances and only on the basis of safety and soundness concerns." In the Matter of The Farmers Bank, Windsor, Virginia, FDIC-92-292b, 2 P-H FDIC Enf. Dec. ¶8025 (Dec. 16, 1992). Furthermore, in order to justify a request for a private hearing, "a bank needs to demonstrate in a concrete fashion how the effects of [a particular] proceeding differ so significantly from those involving other banks as to warrant special treatment." (Emphasis added). Clovis, at I-48.
Upon review under this standard, the Respondents have failed to demonstrate that a public hearing will threaten the safety and soundness of the Bank. The Respondents' arguments are speculative and they provide no supporting documentation. Therefore, there is no legal basis for granting this request for a private hearing.
On April 21, 1994, the respondents entered into a Purchase and Assumption Agreement to effectively sell the Bank to The Peoples Bank, Ripley, Mississippi. They base their request for a private hearing on their concern that "nothing occur that could negatively impact the operation of the Bank or affect the prompt consummation of the purchase and sale transaction." Also, "[t]he public airing of unproven allegations could lead depositors to improperly assume that the Bank is in unsound condition" and "rumors could lead to inordinate deposit withdrawals, potentially creating a liquidity crisis and endangering the consummation of the transaction with The Peoples Bank."
The Respondents have not pleaded any fact which demonstrates how the effects of a public hearing in this case differ so significantly from those involving other financial institutions as to warrant special treatment. In fact, Respondents' position is even weaker than those taken in other section 8 proceedings involving other financial institutions since it is the Respondents, not the Bank in this instance, that are party to the present civil money penalty proceeding. Respondents' concern about negative publicity and its effect on the sale of the Bank is purely speculative. In addition, an action is pending against the Bank and respondents to enforce an administrative order to cease and desist, FDIC v. The Bank of Walnut, et al., in the United States District Court for the Northern District of Mississippi. Respondents have not shown or asserted that the Bank has suffered any adverse consequences resulting from the public proceeding in Federal court.

CONCLUSION

The Respondents have failed to provide sufficient evidence that "exceptional circumstances" exist which would cause a public hearing to threaten the safety and soundness of the Bank. Respondents' request for a private hearing is denied.

ORDER

For the foregoing reasons, it is hereby ORDERED that the request for private hearing is DENIED.
Pursuant to delegated authority, upon the advice and recommendation of the General Counsel.
Dated at Washington, D.C., this 1st day of August, 1994.-------------------